EBA imposes stricter supervision on activities related to crypto assets
The European Banking Authority (EBA) is increasing its regulatory oversight of the crypto sector. In a recent development, the EBA has issued two detailed sets of guidelines to regulate the activities of Crypto-Asset Service Providers (CASPs) and Payment Service Providers (PSPs). As part of these guidelines, the EBA has emphasized the need for compliance monitoring bodies to step up efforts to limit risks that could harm consumers.
The agency has asked payment service providers to screen all companies seeking to register their businesses in European countries. EU lawmakers have asked providers of virtual digital asset services (VASPs) to conduct multi-level due diligence, including a thorough risk assessment.
“The EU restrictive measures regulations do not prescribe how financial institutions should comply with restrictive measures regimes, but emphasize the need to put in place the required due diligence procedures and implement appropriate controls to prevent breaches of the regulation ,” said a message from the said EBA.
The first set of guidelines instructs fintech companies on aligning their governance structures and internal policies. The second set outlines the steps these companies must take to process crypto transactions in accordance with regulatory requirements.
“Conduct an exposure assessment of mitigation measures, which should inform establishments’ decision on the types of controls and measures they should implement to effectively comply with mitigation measures,” the guidance said.
The document further advises fintech and Web3 platforms to implement a screening system in line with the restrictive measures imposed by EU regulators. The final guidelines will be translated into all official EU languages and published on the EBA website, although the timeline for publication has not yet been made public.
The EU has been actively regulating the virtual digital assets (VDA) space for some time. Last year it finalized its MiCA regulations, which set out clear do’s and don’ts for Web3 companies. Given the high volatility of crypto assets, governments worldwide, including the EU, are focused on protecting their citizens from potential financial risks.
